Isolux Said to Prepare Takeover of T-Solar After Subsidies Cut

Grupo Isolux Corsan SA is set to take control of T-Solar Global SA, the world’s biggest operator of photovoltaic plants, and integrate it into a newly created infrastructure company with 7.5 billion euros ($10.6 billion) of investments, according to a person familiar with the deal.

Spain’s largest closely-held construction company will convert its 19 percent stake in T-Solar into a majority holding through a 120 million-euro capital increase, said the person, who asked not to be named because the transaction hasn’t been completed yet.

Isolux, based in Madrid, is aiming to increase its revenue by investing in Brazil, India and the U.S. as the Spanish government reduces subsidies for solar energy to keep a lid on its own deficit. Photovoltaic plant earnings in Spain were cut by as much as a third this year after above-market rates they earned were reduced to lower power bills.

T-Solar will be combined with Isolux Infrastructure, which will control 1,000 miles of highway concessions, 3,100 miles of power transmission lines and 168 megawatts of photovoltaic generators, the person said.

The solar developer built most of its plants in 2007 and 2008 when the government sparked an investment boom by offering subsidized rates for clean energy. Spain changed the law in December to limit the hours that plants could earn above-market rates after installations exceeded their target almost 10-fold.

Photovoltaic generators convert sunshine into electricity when light strikes a semiconductor such as silicon, creating a current that can be fed into the power grid. The technology will provide about 11 percent of the world’s electricity by 2050, the International Energy Agency says.

Two Spanish savings banks, Caja Navarra and Cajasol, also invested in the capital increase, the person said.

Source: Ben Sills, Bloomberg.com